Saskatchewan-North Dakota pipeline proposed

A new study says building a pipeline from northwestern North Dakota to TransCanada Corp.’s new Keystone pipeline in southern Saskatchewan would be the most efficient way to move the region’s oil production.

BISMARCK, N.D. — A new study says building a pipeline from northwestern North Dakota to TransCanada Corp.’s new Keystone pipeline in southern Saskatchewan would be the most efficient way to move the region’s oil production.

North Dakota officials intend to pitch the US$199 million project next week at a regional oil conference in Regina that is expected to draw more than 900 industry officials, said Lynn Helms, director of the state Department of Mineral Resources.

Justin Kringstad, director of the state Pipeline Authority, is scheduled to outline the study’s conclusions at the conference Monday.

Kringstad and Helms said its data will be used to attempt to interest private pipeline companies in the project.

Ron Ness, president of the North Dakota Petroleum Council, said the study has been widely anticipated.

“It is something that everybody’s been asking questions about, the access to the Keystone pipeline,” he said. “Is it feasible? What would it cost? What are the ramifications?”

“There are other proposals being considered by operators and pipelines as well,” Ness said. “I think this is just one more piece of the puzzle.”

The Pipeline Authority commissioned the study, which was done by two engineering firms and explored three possible pipeline routes.

Each began at a point near the north border of the Fort Berthold Indian Reservation, between Parshall and New Town.

The other two would transport oil to the company’s Keystone line, with linkups in southern Saskatchewan or eastern North Dakota, depending on the route taken.

Building a 12-inch line north to Saskatchewan, where it would meet the Keystone line near Whitewood, “appears to be the preferred alternative,” the study said.

The northern route goes through Mountrail and Burke counties, which have gained prominence as oil producers with the ongoing development of the oil-producing Bakken shale rock, the report says.

It could connect to two existing Enbridge oil pipelines, and the route has the most potential for future increases in the pipeline’s oil-carrying capacity, the report says.

The report estimates the northern route pipeline would be 270 km long and cost $199 million to build.

The study was done by Kadrmas, Lee & Jackson, a North Dakota engineering firm, and Rooney Engineering Inc. of Centennial, Colo.

Although lower prices have slowed oil pumping in western North Dakota, transportation problems have been a significant factor in limiting production.

At peak prices, the region’s oil pipeline network had all the crude it could carry, forcing producers to either throttle back on production or pay more to ship by truck or rail. A shortage of pipeline space translated into lower prices for oil producers.

A TransCanada spokeswoman at the company’s headquarters in Calgary said that no one was available to comment on the report. Helms said North Dakota officials have conferred with TransCanada about the study.

TransCanada’s Keystone pipeline is being built to carry crude from eastern Alberta to Illinois refineries and to Cushing, Okla., a major oil supply hub. A segment of the 2,148-mile pipeline has been built through eastern North Dakota.

Construction has not yet begun on the Keystone XL pipeline, which is intended to supply crude to Houston and Port Arthur, Texas. In the upper Great Plains, the pipeline’s route will go through Montana, South Dakota and Nebraska.

The report was presented Tuesday to the state Industrial Commission, which oversees North Dakota oil and gas regulation. Its members are Gov. John Hoeven, Agriculture Commissioner Doug Goehring and Attorney General Wayne Stenehjem.

“The next step now is … to develop a marketing plan so they can work with companies that are interested in building a pipeline,” Hoeven said.